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  • #31

    I think there are two similar terms that are often confused.


    Flat fee is generally the lowest cost.  You pay for a plan or for the time of the adviserr, regardless of dollars invested.

    Fee only is an adviserr who makes  his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee.  The fees should be upfront and transparent.  As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.


    What you really want to avoid is an “adviser” who is really a salesperson getting paid by the products being sold rather than by the purchaser.  This person will be incentivized to have you trade often and pay the largest fees possible per trade.  As is very apparent from the big data conversation, if you aren’t paying for it, then you are the product, not the customer.
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    Thank you for this reply. By George I think I’ve got it.

    The one thing that I was aware of, is that you want to stay away from someone who makes their money by selling you a product (as you alluded to in your reply). Score one for me.
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    Hi Molecularblonde –  may I give you a suggestion, it may or may not appeal but just thought I’d throw it out there.  If you want to use an advisor but are afraid of making another mistake (which I completely understand because it is exhausting and costly) – pick two so you can get second opinions on everything.

    You have a good size portfolio, there are alot of advisors whose minimums are only $100k or $250k.  Hire two of them – give each their minimum, keep the rest in a do-it-yourself Vanguard portfolio per WCI suggestions – and then ask the same questions to both.  Have BOTH of them help you with Estate Planning, Tax Planning, Investments, Insurance, etc.

    Over time you’ll start seeing the difference in advice and also get multiple perspectives, and you can make the final decisions yourself.  I know I could get in trouble with fellow advisors if they read this, because most of them wouldn’t like to be in “competition” with someone else. But I think there is nothing wrong with it, I do the same when it comes to other professionals.  Not all the time, but sometimes.  I mostly trust my doctors, but on occassion I’ve consulted with a second one if I wasn’t sure I was getting the right advice.  I always research what Google says before I give an electrician or plumber my money to make an expensive repair.

    Yes, there are times when it would be easier for me to manage all the clients money because some of them can be lazy and everytime I ask them to do something on their 529 or 401k plans or get me statements so I can try to coordinate, it doesn’t get done.  But if the client is reasonably educated and motivated, I have no issues with someone having two or more planners.  A few of my really high net worth clients have multiple ones and there are times when the other planner knows something I don’t, in those cases I welcome the chance to learn and grow.

    Rather than 0% DIY or 100% DIY, take $100k to $250k, give it to a decent planner or two, follow WCI for the rest, and I bet you’ll come out much savvier in a year or so.  Good luck, I can hear the worry in your posts, and I used to be you 15 years ago at age 31 when I got divorced and knew nothing about finances (I was a CPA and Auditor right out of college but knew NOTHING about managing money while married!)  I hated anything to do with taxes or investments, if you asked me what an IRA was, I would have guessed “Irish Republican Army?”  And then somehow I had to get into it since I was newly single and I discovered it wasn’t so bad if you have the right guidance and education on the basics.

    So I feel your worry, but I hope my suggestion might be something to consider, good luck, and please post back in a year, I’m sure we’d all love to see an update.
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    Thank you very much for your reply. It’s so helpful, I can’t even tell you!

    While I digest all that you wrote, can I specifically ask this question:
    If you have an account with Schwab can you invest in Vanguard funds?


    • #32
      Hi MolecularBlonde -

      Sure, you should be able to invest in Vanguard at Schwab.  All of the major custodians offer Vanguard funds.  But since you're on the retail side and not the institutional (where we advisors are), your lineup is usually more limited and you will get A, B, or C share classes which cost more than I (institutional) shares.  So for example, an A share might have a 0.8% annual expense and an I share will only have 0.4%.  Although I think with Vanguard index funds, there is usually only one low cost share class, so in that case it shouldn't be an issue.

      But it's very likely that whatever you are being offered at Vanguard, you will get elsewhere too, however if you have specific funds in mind I would call Schwab and ask them by giving them the specific Ticker Symbol, they can let you know.

      I'm so glad I've been helpful, I know it's overwhelming when you first try to understand it all.